Cell phone makers could cave on FM radios—if price is right

Could the consumer electronics manufacturers, the ones who crank out our cell phones, actually cut a deal on including a mandatory FM tuner in every device they produce? They certainly could—if the price is right (and legislation looks inevitable).

Earlier this week, we reported on the compromise talks underway between the National Association of Broadcasters (radio) and musicFIRST (artists and labels). The two sides have been talking for almost a year, trying to work out some deal to free up the Performance Rights Act from its legislative logjam in Congress.

The music industry demands that radio start paying hundreds of millions of dollars a year for the right to play music on the air, but radio has so far refused (a special copyright exemption has long supported radio's position). Now, though, the NAB is seriously considering a deal that would limit its payout to around $100 million a year—a figure far below the group's expectations should the Performance Rights Act pass in its current form. As part of that deal, radio would see FM receivers mandated in every cell phone, further expanding radio's market (which, believe it or not, is still robust). The two sides would then seek to have Congress write the deal into law.

On Monday, Consumer Electronics Association boss Gary Shapiro blasted the idea as a "backroom scheme" that is "the height of absurdity." To let you know how he really feels about the idea, he added, "Rather than adapt to the digital marketplace, NAB and RIAA act like buggy-whip industries that refuse to innovate and seek to impose penalties on those that do."

But it turns out that Shapiro's opposition to the "buggy-whip industries" has some pragmatic limits. The trade journal Inside Radio (subscription required) suggested this morning that Shapiro's refusal to go along wasn't iron-clad, and that money could lead to a deal.

We checked in with CEA, and a spokesperson tells Ars that the group still opposes all "mandates that force backward-looking features and functions into cutting-edge hand-held devices" and will fight to keep any such deal from making its way into US law.

Should Congress look inclined to go along with the idea, though, CEA would try to cut its own deal. "If it appears that the absurd mandate moves forward in Congress," CEA tells us, "we will continue to protect the interest of our more than 2,000 consumer electronics companies and will fight for the royalty to be vastly increased and shared with those having to bear the cost of the mandate."

Such a "vast increase" in the royalty payout could well be enough to scuttle the deal, which is probably the point. But one thing is clear: if cell phone builders must include FM radio in their devices, they intend to be well-paid for the hassle.